By: Jaime Farrant, LL.M.
Are you interested in preparing a property in Puerto Rico to rent it to local or foreing tourists, either on your own or through platforms like Airbnb? If your response is yes, here is a list of some of the most important things you need to do do in order to be able to begin receiving guests:
- Create a legal entity: When you incorporate, as a general rule, you are protected from personal legal liability in the event that you are sued for something that happened in the property. Puerto Rico’s laws allow for several legal structures, so you can select the one that is most convenient to you.
- Register with the Treasury Department. You will need to get with the agency a Merchant Registration (“Registro de Comerciante”) to operate your business and get all required permits.
- Obtain a Use Permit – you will have to apply for a use permit with the Office of Management and Permits (known as OGPe).
- Register in your municipality – you will have to register with a municipality to pay municipal taxes, also known as “municipal patents.” Furthermore, if your property is in Dorado, you will have to comply with Ordinance Number 7 of January 27, 2021. There are several municipalities considering passing their own ordinances, so, you will need to either monitor municipalities or hire an attorney that will do this for you.
- Investigate if you qualify for any tax incentive.
- Register as an innkeeper (“hostelero”) with the Puerto Rico Tourism Company.
- Register with Airbnb or any other platform where you want to advertise your property.
- Comply with the Puerto Rico Hostelry Regulation, in particular, with Chapter VIII. This Regulation establishes, among other things, that a structure to be used for short term rentals cannot have more than 6 units.
- Begin to operate the property as a short-term rental.
- Retain the 7% occupation tax and report it to the PR Tourism Company in the Monthly Tax Declaration. If you register with Airbnb, they will directly deduct this amount from the reservation.
As you can see, the process to operate a short term rental can be fairly complex and extensive. At Farrant LLC, we are available to advice and represent you throughout the legal process needed to operate a short term rental. Please email or call us today to schedule an appointment so we can discuss how we can help you.